Monthly Archives: February 2014

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Article 26(3) of China’s Patent Law requires that the specification of an application set forth the invention (or utility model) in a sufficiently clear and complete manner so as to allow a person skilled in the relevant art to be able to carry out the invention. According to the Guidelines for Examination Part II Chapter 10, sufficient disclosure of a chemical (compound) invention should satisfy the following requirements:

Identify the chemical (compound);

Describe how to prepare the chemical (compound); and

Describe the use and/or the technical effect of the chemical (compound).

On December 4, 2013, the Patent Affairs Administration Department (Patent Affairs Department) of the State Intellectual Property Office of China (SIPO) held a “News Briefing on Patent Examination in SIPO” to “clarify” the examination standard involving the sufficiency of disclosure of chemical and medical inventions. Specifically, the briefing discussed the relationship between the submission of post-filing experimental data and the sufficiency of disclosure during the examination of such applications. The reason for the briefing was to address the problem of some Chinese Examiners applying a different standard of examination for sufficiency of disclosure than that required by SIPO. The effective date for the application of the “clarified” standards was October 17, 2013. These standards apply only to Office Actions issued after this date. CCPIT Patent and Trademark Office provided a report of the briefing which can be found at the AIPLA web site.

The briefing reiterated that the sufficiency of disclosure involves determining the technical solution achieved by the claims and whether this solution was achieved as of the filing date of the application. Generally, in chemical (compound) applications in China, Examiners require the scope of the claims to conform very closely with the examples or specific embodiments described in the application at the time of filing. Moreover, Chinese Examiners typically will not consider any supplemental data submitted after filing. However, the briefing clarifies that the submission of post-filing experimental data is permissible in very limited instances, specifically, if being used to confirm that the technical solution has the use or effect asserted by the Applicant in the specification (such as to prove the facts or statements in the original specification are correct). Nonetheless, submission of post-filing experimental data will not rectify a disclosure that is insufficient at the time of filing. An example is provided of an application claiming a new use for a known compound, the use of which is contradictory to what is known in the prior art. According to the briefing, in such an instance, a simple assertion in the specification of the new use will not be deemed sufficient for a person skilled in the art to be “convinced” that the technical solution does in fact have the asserted use. Rather, the specification must contain experimental data supporting the use in order for the Examiner to find sufficiency of disclosure.

While the clarification by the SIPO is helpful, it will be interesting to see how Chinese Examiners implement the standard. It is not entirely clear how Chinese Examiners will differentiate between the permissible (to support that the facts or statements regarding the technical solution) and impermissible use (to establish the technical solution) of post-filing experimental data.

Please what the BRIC Wall for further updates on the use of post-filing data and the sufficiency of description in China.

Last week’s posting “Patent Trolls: A Global Perspective” prompted a reader to ask if information could be provided regarding patent trolls in the European Union. This post is in response to that suggestion.

Patent Trolls in the European Union

While there has been a fair amount of patent troll activity in the European Union, it has not risen to the level seen in the U.S. or in Russia. Three patent trolls that have been involved in several patent litigation actions in Europe include the German based companies of IPCom GmBH (IPCom) and Papst Licensing GmBH & Co. (Papst) and the Luxembourg-based company, High Point SARL(a subsidiary of Inpro Licensing) (High Point).

IPCom is the owner of several patents relating to mobile telecommunications technology which were acquired from Robert Bosch GmBH in 2007. IPCom has sued several companies, including Nokia, HTC Corp., T-Mobile GmbH and Apple (seeking US $2 billion in damages – one of the largest damage awards ever sought in German history) for patent infringement in the District Court in Mannheim, Germany. Many compare the Mannheim District Court to the District Court in the Eastern District of Texas because of its quick resolution of patent infringement cases. In fact, the courts in Mannheim, Düsseldorf and Munich are well known for their speed in deciding patent infringement cases. The reason for such speed is Germany’s bifurcated system where patent infringement and validity (revocation) actions are decided on separate tracks in different courts. This split system allows the German courts proceed very quickly, especially in infringement cases. For example, a permanent injunction can be obtained by a plaintiff in a successful patent infringement lawsuit in Germany in as little as eight months. In contrast, a decision on the validity (revocation) of a patent may take anywhere from 18 months to two years. Additionally, plaintiffs in Germany (including multi-national corporations) enjoy wide-forum shopping latitude because a court has jurisdiction if a patented product is marketed over the internet in its district. However, patent trolls in Germany have to be careful when bringing patent infringement actions because under German law, the non-prevailing party in litigation must pay the legal fees of the prevailing party in an amount proportional to the estimated value of the case. Given the estimated value of these patent infringement lawsuits, the legal fees to be paid to the prevailing party can be quite significant.

Papst is the owner of an European patent relating to road pricing systems. Toll Collect GmbH (Toll Collect) was hired by the German government to develop and place electrical road pricing system for trucks on German roads. The systems also involved placing terminals in The Netherlands and neighboring countries. Papst and Toll Collect were involved in patent proceedings in Switzerland and Germany regarding patent infringement and invalidity of the patent and damages. Toll Collect also brought invalidity proceedings before the Dutch Court. The Dutch Court partially upheld validity of the patent and found infringement by Toll Collect.

High Point asserted the Dutch counterpart of EP 0 522 772B1 (relating to mobile communication networks) against KPN (the largest Dutch provider of telecommunications and information technology services). Ultimately, the Dutch counterpart was found invalid by the District Court in The Hague. However, High Point sued E-Plus, Ericsson and Nokia Siemens Networks in Germany, Sprint Nextel (and others) in the U.S. and KDDI Corporation(a Japanese telecommunications company that provides mobile cellular services) in Japan. Interestingly, the German Federal Court upheld the validity of the German counterpart of EP 0 522 772B1.

Patent Trolls and the Unified Patent Court

While the U.S. continues to work on measures to avoid or at least reduce the effect of litigation originating from patent trolls, the European Union (EU) institutions are working on the future centralized litigation system known as the Unified Patent Court (UPC). The agreement setting out the main principles and structure of this future litigation system was signed by the various participating States in 2013; nonetheless, the rules of procedure are still being finalized. However, this may lead you to wonder what the finalization of the rules of procedure has to do with patent trolls? Well, the success by which patent troll litigation will be facilitated or prevented in proceedings before the UPC will greatly depend on the wording of the rules of procedure. In fact, the UPC agreement (UPCA) contains two provisions which are particularly controversial and whose implementation may significantly influence the behavior of patent trolls before the UPC.

The first provision is contained in the article related to provisional and protective measures (Article 62 of the UPCA). According to this provision, when requested to grant preliminary injunctions, seizures or delivery up orders, the UPC “may … require the applicant to provide any reasonable evidence in order to satisfy itself with a sufficient degree of certainty that the applicant is the right holder and that the applicant’s right is being infringed, or that such infringement is imminent.” Because of the inclusion of the term “may”, this provision confers a near endless degree of discretion regarding the extent to which a Patentee needs to prove its case, especially with respect to proof of infringement, in order to obtain the requested measures. The concern is that some of the divisions of the UPC will require a very low standard of evidence, making it very simple (perhaps even too simple?) for any Patentee, including a patent troll, to obtain such preliminary measures, with the risk of such measures being granted in cases where they are not truly justified.

The other provision is contained in the article related to the competence of the first instance of the UPC (Article 33 of the UPCA). Specifically, this provision establishes that infringement proceedings will generally be brought before the UPC division in the area where the infringer is located or where the infringement occurred (called a “local” division). If an alleged infringer counterclaims for revocation of the patent, the local division of the UPC handling the infringement action has the option, at its discretion, of referring the counterclaim to another UPC division (the central division, which is competent predominantly in revocation actions), thus resulting in a bifurcation of the infringement and validity determinations, similar to that described above in connection with German patent proceedings. If a local division of the UPC decides, at its discretion, to proceed with the infringement action, it does not have to wait for the outcome of the counterclaim for revocation. Therefore, the result of such an action is to nullify the defensive effect of the counterclaim thus increasing the likelihood that the local division will find a potentially invalid patent infringed. It bears noting that if this option is exercised too freely or frequently, it may enable patent trolls to obtain favorable infringement decisions on invalid patents.

A sense of just how controversial the above two provisions are can be found in a letter published on September 26, 2013 in the New York Times. This letter is addressed, inter alia, to the various EU institutions that promoted the enactment of the UPC system and are presently working on the UPC rules of procedure. The letter alerts these institutions of the risks of the above provisions. What is significant to note is that the signatories to this letter, including Apple Inc., Samsung Electronics Co. Ltd., BlackBerry Ltd., Cisco Systems Inc., Google Inc., Yahoo! Inc. and Microsoft, are some of the world’s largest corporations with immense patent portfolios and a high number of patent-related litigations worldwide. The collection of these signatories is even more striking when one considers that some of these companies are parties against one another in several patent-related litigations. However, despite this reality, these companies felt the need to publicly take a joint position on the UPC. Additionally, the signatories push strongly for the adoption of rules of procedure that will “allow operating companies to focus on innovation instead of litigation, thereby fostering economic growth and prosperity in Europe.”

When the letter was published, the UPC Preparatory Committee had been working on the 15th draft of the rules of procedure. Given the comments in the letter, the 16th draft is eagerly awaited. It will be interesting to see whether or not the 16th draft will include any mechanisms to prevent abuse of the new system by patent trolls, particularly considering that when the EU institutions pushed for passage of the UPCA after its long and arduous 40-year long debate, it most certainly never contemplated a system that might encourage abusive patent litigation.

This post was written by Lisa Mueller and Micaela Modiano of Modiano & Partners.

As an update to our post on Patent Trolls: A Global Perspective, we have learned from our colleagues in Japan that Japanese courts decided 2 patent infringement cases involving patent trolls in January 2014.

The first case, IPCom GmBH (IPCom) v. eAccess (a Japanese telecommunications company that provides asymmetric digital subscriber line (ADSL) services to other internet service providers), was filed in the Tokyo District Court. The patent at issue involved a connection method for mobile phone calls. The Court dismissed IPCom’s suit on the ground that the accused products did not fall within the scope of the claims. Readers will recall that IPCom is the patent troll that recently filed a patent infringement lawsuit against Apple in Mannheim, Germany, over Apple’s use of network management technology that prioritizes emergency calls, even if the network is congested.

The second case, High Point SARL (a Luxembourg-based company) [High Point] v. KDDI Corporation(a Japanese telecommunications company that provides mobile cellular services) was filed in the Intellectual Property (IP) High Court. The patent at issue involved a system for maintaining the quality of radio communications. The IP High Court dismissed the action on the ground that the patent was invalid. High Point has sued Sprint Nextel and T-Mobile in the U.S. over 4 patents relating to methods of managing wireless call traffic through a telecommunications network and other functions of the system.

Please continue to watch the BRIC Wall for further updates on global patent troll activity.

Contributors to this post include Lisa Mueller and Katsumasa Osaki of Kawaguti & Partners.

In the United States, patent infringement lawsuits filed by non-practicing entities continue to rise. A non-practicing entity (NPE) is an entity that does not manufacture products themselves and broadly includes universities, individual inventors, research institutions and speculators who purchase patents from others. According to Patent Freedom, based on the largest patent holdings, the top 5 NPEs are Intellectual Ventures, Interdigital, Round Rock Research LLC, Wisconsin Alumni Foundation and Rockstar Consortium LLC. (Rockstar).

Some refer to many or all NPEs as “patent trolls” arguing these patent holders wait until another party brings a product to market and then jump out from “under a bridge” to a demand a toll (namely, a license fee and/or royalty). Many also consider patent trolls to engage in abusive litigation practices such as filing specious claims solely for the purpose of forcing an unjust settlement, instituting suits against distributors, retailers or end-users rather than the original manufacturer or supplier, sending demand letters to individuals or small businesses who are unsophisticated in patent matters, etc. (many refer to these patent trolls as patent assertion entities (PAEs)).

Patent Freedom lists Apple, Samsung, Hewlett Packard, AT&T and Dell as the top 5 most frequent targets of patent trolls. In fact, Apple recently reported that it was the target of 92 lawsuits by patent trolls in the U.S. over the last three years. Of these cases, 57 are closed with Apple paying the “toll” to the troll in 51 of these cases. Apple is facing patent trolls in Europe as well. Recently, the German Patent Holder, IPCom GmBH (IPCom) filed a patent infringement lawsuit against Apple in Mannheim, Germany, over Apple’s use of network management technology that prioritizes emergency calls, even if the network is congested. IPCom is requesting over US $2 billion in damages. Moreover, IPCom has stated that it is suing other companies, in addition to Apple, for alleged infringement of the same European patent.

We at the BRIC Wall Blog thought it would be interesting to examine patent troll activity in countries other than the U.S. and Europe. In this post, we examine patent troll activity in Australia, Brazil, Canada, China, India, Japan and Russia.

Australia

Australia has limited patent troll activity that does not rise to the activity seen in the U.S. In fact, in many instances, patent troll activity has risen as a result of troll-like activities that originated in the U.S. For example, last year, Vringo Incorporated (Vringo) sued the Australian arm of ZTE (which provides telecommunications equipment and network solutions in 160 countries). Prior to this suit, Vringo sued a number of companies, including Google, AOL, Microsoft, for patent infringement in the U.S. Interestingly, there has been some debate in Australia as to whether or not Vringo should be classified as a “classic” patent troll.

There are a number of factors that have likely contributed to the limited activity of patent trolls in Australia. These factors include the following:

1. At the time of instituting a patent infringement proceeding, an applicant is required to file a “genuine steps” statement. In a genuine steps statement, the applicant specifies (a) the steps it has taken to try and resolve the issues in the dispute between the applicant and the respondent; or (b) the reasons why no such steps were taken (which may relate to, but are not limited to, the urgency of the proceedings and whether, and the extent to which, the safety or security of any person or property would have been compromised by taking such steps). A respondent in the proceeding is provided a copy of the applicant’s genuine steps statement and must file its own genuine steps statement before the first hearing in the case. Failure to take genuine steps or failure to provide a statement may result in the court not exercising its powers fully in favor of a party or in an adverse order of costs.

2. Patent infringement proceedings are almost invariably met with a counterclaim for revocation.

3. In a revocation action, there is no presumption of validity of the patent.

4. Infringement and revocation proceedings are held before the Federal Court of Australia (Federal Court) and hence, generally before a judge experienced in patent matters (patent infringement and revocation proceedings are conducted before a judge and not a jury).

5. The Federal Court has an active “case management” process with directions hearings requiring the attendance of both parties (the first hearing is typically scheduled fairly soon after commencement of the proceeding).

6. Although preliminary injunctions are available, it is unlikely that a patent troll would be successful in obtaining such an injunction against a practicing alleged infringer.

7. An “unsuccessful” or “losing” party in a court proceeding will typically have costs awarded against them. Such an award of costs can be greater than 50% of the attorney costs of the successful (prevailing) party.

8. Even if a patent troll did win a court proceeding and received an award of costs, such an award would not likely even cover their actually costs in bringing the patent infringement action.

As shown by the above factors, a patent troll may not only lose a lawsuit for patent infringement, but it also risks having its patent invalidated and a significant award of costs made against it (in essence paying for its own proceedings as well as a good proportion of those of the alleged infringer). Moreover, even if the court finds in a patent troll’s favor, it may not receive sufficient monetary satisfaction to cover its actual costs in bringing the lawsuit.

Additionally, Section 128 of the Australian Patents Act (1990) provides that a person unjustifiably threatened with infringement proceedings (often referred to as an “unjustified threat”) may apply to a court to restrain the making of those threats and recover any damages sustained as a result of the threat. Courts have held that the “mere notification” of the existence of a patent or patent application by itself does not constitute a threat of proceedings. However, any words used beyond a mere notification may be interpreted as a threat of proceedings. If a court finds an unjustified threat it may award an injunction and/or damages. Therefore, if a “patent troll” is found to have engaged in a “threat”, the only way it could defend itself against an injunction and/or an award of monetary damages would be to commence patent infringement proceedings and have the court find that infringement occurred. However, a patent troll may be liable for damages if the court finds that a “threat” was made, was “unjustified” and that the patent is either invalid or not infringed.

Additionally, it is likely that that the manner in which infringement proceedings are funded in Australia is also a factor in the lack of patent troll activity. The “litigation funder” business model is not well established in Australia with respect to patent matters and it appears that most of the major intellectual property firms do not handle infringement and revocation actions on a contingency fee basis. Without a contingent fee arrangement, a patent troll would have to be prepared to fully fund any infringement (and likely, revocation) actions.

Brazil

Generally, Brazil does not have a problem with patent troll activity. One significant reason for the lack of activity is thought to be the long period of time it takes for a patent owner to obtain a monetary award from an alleged infringer. Specifically, in Brazil, a patent owner has to litigate in three instances (namely, originally in trial court, followed by an appeal to the appellate court, followed by a “special appeal” to the Superior Court of Justice), in order to confirm a finding of infringement. Many times, this process may take as long as ten years before damages are awarded. This protracted litigation process goes against how a typical patent troll likes to operate.

Canada

Canada has some patent troll activity, however, much like Australia, it does not rise to the activity seen in the U.S. A few companies exist that could be considered to be trolls. These include Rockstar (currently in a patent infringement suit against Cisco), Conversant Intellectual Property Management (formerly called MOSAID and which has a patent portfolio containing over 12,500 patents) [Conversant], Wi-Lan Inc. and Dovden Investments [Dovden]. While Conversant, Wi-Lan and Rockstar almost never litigate in Canada, Dovden has been responsible for approximately 28 patent infringement actions within the last 18 months amounting to about 35% of the patent actions started during that period (http://www.ippractice.ca/2013/08/dovden-investments-impeachment-action/). Interestingly, the city of Ottawa has become home for several non-practicing entities, such as Rockstar, Conversant and Wi-Lan.

It appears that many patent trolls do not litigate in Canada and prefer litigating in the U.S. There are several possible reasons why patent trolls would rather not litigate in Canada. First, Canada really does not have a continuation and continuation-in-part practice comparable to the U.S., and divisional applications must be filed with caution (See, Divisional Practice in the BRICs and other Countries – Part 7 of a 9-Part Series: Canada). Additionally, Canada’s Federal Court Rules can, in limited circumstances, require a Patentee to provide a security for costs before a patent infringement suit will proceed against an alleged infringer. Moreover, the Federal Court, where most patent litigation is conducted, has a few features and procedures that make Canadian patent litigation less appealing to patent trolls. These include the limited availability of interlocutory injunctions (interlocutory injunctions are rarely granted by the Federal Court) and the award of costs to a successful party (which can be significant). Finally, there is a lack of forum shopping available to patent trolls trying to find a plaintiff-friendly court.

China

Generally, China does not have much patent troll activity. However, several Chinese companies, such as Huawei Technologies Co. Ltd. (a Chinese multi-national networking and telecommunications equipment and services company headquartered in Shenzhen, Guangdong) [Huawei] and ZTE have been parties in patent infringement lawsuits brought by several large patent trolls (such as Intellectual Ventures and Interdigital, Inc. (Interdigital)) outside of China, namely, in the U.S., Europe and Australia. The major reason patent trolls have not filed patent infringement lawsuits in China is that the damages awarded in a patent infringement lawsuit are fairly low when compared to the damages generally awarded in a patent infringement lawsuit in the U.S.

In patent litigation in China, the damages for patent infringement are calculated based on the actual loss of the patent owner or on the profits earned by the infringer. For a patent troll, calculation of such damages is often difficult since these companies normally do not practice the invention covered by the patents being asserted. However, if it is difficult to determine actual loss or profits, damages may be awarded by reference to an appropriate multiple of the amount of the royalty fee for exploitation of the patent. Moreover, if it is difficult to determine the actual loss, profits and a royalty fee, a court may award (statutory) damages ranging between RMB 10K to RMB 1M (approximately US $1,600 to $160,000) depending on the type of patent right (namely, an invention or utility model), the nature and gravity of the infringing act, etc. Moreover, in China, the burden is on the complainant to prove actual loss and profits, which can be very difficult.

Because China had not experienced any significant problems with patent trolls, the government has not yet passed any specific anti-troll legislation. Recently, however, courts have found some patent trolls to be in violation of China’s Anti-Monopoly Law. For example, in a recent case between Huawei and Interdigital, the Guangdong High Court ruled that Interdigital violated China’s Anti-Monopoly Law and its “fair, reasonable and non-discriminatory” (FRAND) obligations by requesting Huawei pay excessive royalties for certain standard or essential patents. The Court awarded Huawei RMB 20 million (approximately US $3.3 million) in damages and set a royalty rate of 0.019%. This is the first known case in which courts in China found an abuse of dominance through the use of intellectual property rights. Interdigital has appealed.

India

Patent trolling activity was quite prevalent in India in the Information Technology and Communications sector prior to the enactment of the Patents (Amendment) Act, 2005 (2005 Act). However, after passage of the 2005 Act, a steep decline in the trolling activity has been observed. The reason for this decline is the inclusion in the 2005 Act of a laundry list of non-patentable subject matter, imposition of stringent deadlines for pre-grant opposition, introduction of post-grant opposition, as well as the introduction of a variety of other provisions.

While India’s patent laws do not prohibit the existence of patent trolls, these laws threaten their existence. For example, India’s patent laws require that a (granted) patent be worked or used in India. If a patent is not worked or used in the territory of India, compulsory licensing might be invoked. Also, to tighten the noose further, the Indian Patents Act requires the mandatory filing of a statement of working of a patent at the end of each financial year. Patent holders who fail to file such a statement may be liable for a fine and/or imprisonment. Therefore, in India, patent troll activity is fairly under control and does not pose a major threat to any company seeking entry into the Indian market.

Japan

Generally, Japan does not have much patent troll activity. However, several Japanese companies, such as Sony, Toshiba and Fujitsu have been parties in patent infringement lawsuits brought by patent trolls (such as WiLan, Acacia Research Group and Lochner Technologies) outside of Japan, particularly, in the U.S.

Although the Japanese Patent Law generally allows any patentees to freely use their rights with a few exceptions, the number of patent infringement lawsuits in Japan is only around 100 to 200 per year. In addition, the size of the damages awarded by Japanese courts is much smaller than that awarded by U.S. courts, thus many lawsuits are settled in Japan and not published.

Russia

Russia has a fairly significant amount of patent troll activity. The main incentive for patent troll activity in Russia is the existence of utility model patents which are patents issued without any formal examination. Therefore, in Russia, it is possible for a party to file and obtain a utility model patent on a prior art device. Moreover, under Russian Patent Law, a utility model patent owner enjoys the same scope of exclusive rights as the owner of a full (invention) patent. Thus, a patent owner has a right to use his invention or utility model by any means not contrary to the law, to assign the patent and to authorize or prohibit third parties from using its patented invention or utility model.

Utility model patents are granted for devices only. Specifically, utility model patents are usually granted to electrical and mechanical devices, packs, bottles, furniture etc. No other type of products (such as chemicals or biotechnological inventions) or processes qualify for utility model protection.

As mentioned previously, a utility model application does not undergo substantive examination and it is granted by the Russian Patent Office once the formal requirements are met, which is typically within about 6 to 8 months from the date of filing. In order to be patentable, a utility model must be novel and possess industrial applicability. A utility model does not need to involve or possess inventive step.

With respect to enforcement, Russia has a bifurcated system for patent infringement and invalidity. Thus, in a patent infringement proceeding, a defendant cannot argue that the patent is invalid. This bifurcated system makes it easier for a patent troll to enforce its patent since it only has to focus on proving infringement and it does not have to worry about invalidity.

An example of a case involving a utility model patent and a patent troll involved utility model patent RU31183 entitled “Mobile Terminal”. This utility model patent was directed to well known electronic architecture that could be used in various devices such as mobile phones, car alarm systems, etc. The patent owner filed a number of complaints with law enforcement agencies and circulated cease-and-desist letters to companies who were using devices allegedly covered by the patent. Additionally, the patent owner filed a few civil patent infringement lawsuits as well. Eventually, RU31183 was nullified as a result of cancellation proceedings brought in the Chamber for Patent Disputes. Typically, nullification of an asserted utility model patents is the most common outcome of patent troll attacks, as settlement is less common.

Michael Best Partner Lisa Mueller recently authored the chapter “Helping Clients Understand Biosimilar Product Regulations and the Biosimilar Litigation Process” for Aspatore’s Inside the Minds book series on food and drug law. The chapter explores the effects of the Biologics Price Competition and Innovation Act of 2009 (the Biosimilar Act) on the pharmaceutical marketplace. Mueller also offers guidance to fellow attorneys on dealing with increased enforcement, keeping up to date with FDA requirements and developing effective compliance practices.

In Brazil, yearly annuities are due on any pending patent application or issued patent. Occasionally, mistakes occur and payment of a yearly annuity is not made. Pursuant to Article 86 of the Industrial Property Law (Law), the lack of such payment results in the abandonment of an application or patent. However, Article 87 of the Law gives an Applicant or Patentee the opportunity to have the application or patent restored if payment is made within 3 months of publication of a notification of the abandonment. Specifically, Article 87 states:

“Article 87 – The patent application or the patent may be restored, if the applicant or patentee requests it, within 3 (three) months counted from the notification or abandonment of the application or extinction of the patent.”

In practice, because of the chronic backlog within the National Institute of Industrial Property (INPI), several years (and hence payment of several years worth of annuities) typically pass before publication of a notice of abandonment. When published, the notice states that the application or patent has become abandoned due to the failure of the Applicant or Patentee to make several years worth of annuity payments. The notice recites the years that the Applicant or Patentee has failed to pay annuities.

According to the INPI, many Applicants and Patentees have stopped paying annuities until receipt of the publication of the notification of abandonment. In view of this perceived abuse, INPI has changed its interpretation of Article 87, stating that an application or patent cannot be restored (namely, revived or reinstated) if an Applicant or Patentee has failed to make multiple annuity payments. In light of this new interpretation, INPI has held several patent applications and patents abandoned without possibility of restoration.

Clearly, Article 87 provides a right to restore an application or patent as long as an Applicant or Patentee requests restoration and makes the appropriate payment within 3 months of the publication of the notification of abandonment. Hopefully an aggrieved Applicant or Patentee will challenge INPI’s interpretation before the Courts. In the meantime, Applicants and Patentees should carefully ensure the timely annuity payment. Please watch the BRIC Wall for future updates on annuity payments in Brazil.

This is Part 7 of a nine-part series examining divisional practice in the BRIC as well as several non-BRIC countries. To view Part 1 (Divisional Practice in Mexico), click here. To view Part 2 (Divisional Practice in Brazil), click here. To view Part 3 (Divisional Practice in the United States), click here. To view Part 4 (Divisional Practice in India), click here. To view Part 5 (Divisional Practice in Russia), click here. To view Part 6 (Divisional Practice in China), click here.

Divisional Practice in Canada

Time Periods for filing a Divisional Application

In Canada, a divisional application must be filed before issuance of an original application (parent application). If a parent application becomes abandoned, a divisional application can be filed before the expiration of the time limit for reinstatement of the parent. Divisional applications can be filed for any reason (often referred to as “voluntary” divisional applications) or in response to a lack of unity rejection. Cascading divisionals (meaning a divisional application filed from another divisional application) are permitted.

Requirements for Filing a Divisional Application

When filing a divisional application, a copy of the specification, abstract and drawings from the parent application must be filed. A set of claims (either the original claims from the parent application or a new claim set) must also be included. In addition, the following are also required:

1. A written statement that a patent is being sought;

2. Payment of all the necessary filing fees, as well as the annuity fees accrued since the filing date of the parent application;

3. The name of the Applicant; and

4. The address of the Applicant’s agent.

Claims of a Divisional Application

A divisional application may be filed with the claims as originally filed in the parent or PCT application. However, the claims of a divisional application filed with the same claims of a parent or PCT application will need to be amended at some point during prosecution to ensure that neither the parent or divisional application claim the exact same subject matter and are patentably distinct (meaning novel and nonobvious) from one another.

Double Patenting

In Canada, much like the United States (U.S.), there is a prohibition against double patenting. This prohibition comprises 2 branches:

1. A “same invention” or “coterminousness” branch; and

2. An “obviousness” branch.

The “same invention” or “coterminousness” branch is similar to statutory double patenting in the U.S., where claims of a pending application and an issued patent cannot have the same exact (identical) scope. A rejection based on the “same invention” or “coterminousness” generally is not fatal and can be overcome by amending the rejected claims so as not to have the identical scope as claims of the issued patent or copending application.

The “obviousness” branch is similar to “obviousness-type” double patenting in the U.S. but can be much more problematic in Canada. Under this branch, the claims of a pending application (such as a divisional application) must be patentably distinct (meaning novel and nonobvious) over the claims of an issued patent or copending application. In the U.S., in most instances, an obviousness-type double patenting rejection can be obviated by the filing of a terminal disclaimer. However, Canadian law does not provide for the procedural equivalent of a terminal disclaimer.

Nonetheless, according to Canadian case law, if the claims being pursued in a divisional application were filed in response to a lack of unity rejection in a parent application, then the claims of the divisional application are immune from a double patenting attack based on the parent application (See, Consolboard Inc. v. MacMillan Bloedel (Saskatchewan) Ltd., [1981] 1 S.C.R. 504).

Therefore, an Applicant filing a voluntary divisional in Canada must be very careful to make sure that the claims of its divisional application: (1) do not claim the same invention as the parent application; and (2) are patentably distinct over the claims of the parent application.

Similar to the U.S., an issued patent can be invalidated for double patenting in Canada. However, in contrast to the U.S., no procedural remedy exists in Canada to cure a deficiency under either branch once a patent has issued.

As a matter of practice, the best option in Canada is to file all claims of interest in the parent application, and allow the Examiner to make an assessment of whether there is more than one invention so that a formal requirement for division is on record before a divisional application is filed, even if the parent application is already allowed. In effect, voluntarily filed divisional applications should be avoided in Canada where possible.

Examination of Divisional Applications

A divisional application is treated as a separate application and is accorded a separate application number, requires separate fees, requires a separate request for examination, will be prosecuted separately from the parent application, and will result in an independent patent from the parent application. The fees for a divisional application are the same as for any parent application. The term of patent for a divisional application is twenty years from the filing date of the very first parent application.

When prosecuting a divisional application, care should be taken to avoid amendments that might cause the claims to depart significantly from what the Examiner originally considered to be a separate invention. Therefore, to ensure validity of both parent and the divisional patents, it is advisable to refer back to the original requirement to divide a set of claims so that new issues of double patenting are not created inadvertently.